The free energy market gains new momentum with SUI regulation, but cost reduction challenges persist, a study indicates.
The Brazilian energy landscape is poised to enter a new phase of expansion with the recent regulation of the Supplier of Last Resort (SUI). The government signed the decree that formalizes the mechanism, a crucial step to expand access to the free electricity market. However, the measure also sheds light on the complexity of translating this opening into concrete benefits for consumers, especially in terms of cost reduction.
A recent study by the Brazil Competitive Movement (MBC) indicates a potential competitiveness gain of BRL 121.3 billion for the national electricity sector, values that have not yet been fully captured. The analysis, which compares Brazilian energy costs with those of OECD countries, reveals that, in 2024, Brazil failed to realize approximately BRL 10 billion of this potential compared to the previous year, partly due to the increase in energy prices in the free market.
SUI: Security and Expansion for the Free Market
The SUI regulation is seen as a fundamental pillar for the expansion of the Free Contracting Environment (ACL). The mechanism will serve as an important security measure, protecting consumers who choose to migrate and, should the need arise, find themselves without a supplier. This protection aims to mitigate one of the perceived risks for new consumer profiles joining, including smaller companies.
Law No. 15,269/2025 establishes a clear timeline for this expansion. From now on, industrial and commercial consumers supplied at low voltage will have up to 24 months to freely choose their energy supplier. For others, such as residential and rural sectors, the extended period is 36 months. This change has the potential to significantly increase the number of participants eligible to negotiate energy contracts, fostering competition in the sector.
SUI’s implementation is strategic, as it ensures that market opening progresses without compromising energy supply to consumers in cases of contractual instability or the exit of energy traders.
Energy Competitiveness: A Fight Against Structural Costs
The MBC analysis highlights that energy competitiveness in Brazil is not limited solely to the price of energy negotiated in the free market. Factors such as charges, taxes, and transmission and distribution grid usage fees make up a significant portion of the final electricity cost, representing over 45% of the electric bill, according to CNI data used in the study.
The MBC aims to reduce electricity charges by 10% by 2030, as part of a broader strategy to decrease the Brazil Cost. Tatiana Ribeiro, MBC’s executive director, emphasizes that despite Brazil’s advantages in clean energy generation, structural costs still limit the sector’s competitive potential.
“The indicator shows that Brazil still has significant room to increase the electricity sector’s competitiveness and capture additional efficiency gains. The country has important advantages in clean energy generation but still contends with structural costs that limit some of this competitive potential,” Ribeiro states.
Next Steps: Regulation and Opportunities
The SUI regulation is just one piece in the complex puzzle of modernizing the Brazilian electricity sector. For the benefits of market opening to fully materialize into cost reductions, it is crucial that the expansion of competition be accompanied by a review of the components that raise electricity prices.
Regulatory predictability and the continuous pursuit of efficiency in allocating system operation and expansion costs will be crucial. The BRL 121.3 billion potential identified by the MBC serves as an indicator of the existing opportunity but also of the path that still needs to be traveled. The convergence between expanding access to competition and reducing structural costs is what promises to boost the competitiveness of the Brazilian electricity sector and benefit companies and consumers.
